Bill Proposes Shore Operate Under Lower Sales Tax

ANNAPOLIS – As the Maryland General Assembly session rolled on toward its midway point this week, several bills of local importance were filed in both the House and the Senate including a bill that would revert the sales tax in nine counties on the Eastern Shore including Worcester back to the 5 cents per $1.00 rate and another that would create a special tax assessment district for working commercial waterfront areas.

As part of sweeping changes to the tax code approved by the General Assembly during a special session last fall, the sales tax in Maryland was increased by 20 percent from five cents on the dollar to six cents on the dollar. This week, however, five Eastern Shore Senators, all Republicans, including Sen. Lowell Stoltzfus, who represents Worcester, filed a bill that would return the sales tax on the Eastern Shore back to its original rate.

If approved the bill would essentially create two different sales tax rates in Maryland with the Eastern Shore counties paying a lower rate than the rest of the state. Stoltzfus said this week the bill was largely symbolic and that he didn’t hold out much hope for its passage.

“The point of this is that we really wanted to send a message,” he said. “It’s not likely to pass, but we want it made clear the residents on the Eastern Shore are not happy with the sales tax increase.”

Stoltzfus said the sales tax increase approved last fall puts effects consumers but also puts Eastern Shore merchants at a competitive disadvantage. He cited the proximity of the shore to Delaware, where there is no sales tax.

“The negative impact of the 20-percent sales tax increase on Eastern Shore business is huge,” he said. “Many businesses on the shore are competing directly with Delaware and shoppers are finding it convenient and economical to go across the state line, particularly for larger purchases. It’s a real reason for concern.”

Another bill of local importance filed this week would establish commercial waterfront property as a subclass for property tax assessment purposes. Sister bills were filed in both the House and the Senate with Stoltzfus signed on as a co-sponsor on the Senate bill and Delegate James Mathias signed on as a co-sponsor for the House bill.

The intent of the bill, which was borne out of the working waterfront commission, is to protect working commercial waterfront areas and the indigenous seafood industry from soaring tax assessment increases by assessing waterfront property based on its use rather than its market value. Essentially, it would allow commercial waterfront areas to be assessed based on what is actually going on at them rather than what they could be in the future if they were redeveloped.

“It’s vitally important that we take steps to ensure the state’s seafood industry continues to have a viable base from which to work,” said Stoltzfus. “This bill would allow working waterfront properties to be assessed on a use basis rather than what they are capable of becoming. It’s a way to look at the assessments for working marinas and keep them at a reasonable level.”

Stoltzfus said the bill simply boils down to a current use versus potential use issue and it would apply to working waterfront areas all over Maryland and the Eastern Shore including the commercial harbor in West Ocean City, for example.

“We can’t assess a seafood business at the same rate as a condominium,” he said. “That use is not generating the same income as a different use would.”

Mathias, who is a co-sponsor on the sister bill filed in the House, agreed the bill’s intent is to protect working commercial waterfront areas in Maryland, which have come under increased redevelopment pressure. Of course, many working waterfront areas, including the commercial harbor in West Ocean City, are protected by stringent zoning codes, but creating a special tax assessment subclass could limit the temptation to redevelop the historic areas.

“This is an important measure to ensure historic working waterfront areas are assessed based on what they are and not what they could potentially be,” said Mathias. “The seafood industry is indigenous to our area and represents a significant part of the state and local economy. When you look at these large tract waterfront parcels, we have to be able to preserve and protect them.”

In yet another bill introduced this week related to watermen and the seafood industry, three Eastern Shore Senators including Stoltzfus filed legislation that would compensate eligible clammers for fair market value of equipment and diminished earning capacity due to the prohibition of hydraulic dredging in the coastal bays behind Ocean City. The General Assembly last year passed legislation banning the use of hydraulic dredging to harvest clams in the coastal bays and the bill introduced this week would provide a mechanism for compensating the roughly 10 commercial clammers put out of work by the new law.

Should it pass, the bill would likely help eligible clammers who have suffered financial hardship because of the new law by compensating them for their equipment and their lost earning potential. It would take effect this year and expire in 2010.

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